Ethel signs a note "payable to the order of Fidelity Bank." Fidelity indorses the note in blank and negotiates it to Ghani,who sells it to Huck.Liability associated with the transfer of the note from Ghani to Huck is

Question

Quizplus · Accepted Answer

The liability associated with the transfer of the note from Ghani to Huck is warranty, as there is an implied warranty that the note is genuine, that Ethel has the right to make it, and that all prior parties have validly negotiated the instrument. If any of these warranties are breached, the transferring party (in this case, Ghani) can be held liable to the subsequent holder (in this case, Huck).

Ethel Signs a Note "Payable to the Order of Fidelity